What’s causing Vancouver’s extraordinary pain at the pumps?

On any given day, people living in Metro Vancouver are taking time to line up at the nearest border crossing. Often the wait to get through can be 90 minutes or longer. Their destination: the nearest gas station on the other side.

Living near a border myself, I’ve seen this spectacle with my own eyes. And many are making the trip to fill more than just their cars with cheap U.S. fuel; they’re loading up multiple jerrycans too. The fact this effectively turns their vehicles into moving car bombs doesn’t seem to matter; these are the type of desperate actions people take when the cost of petrol in their own backyard has gone from ridiculous to obscene.

Recently, the cost of a litre of gas in Metro Vancouver cracked the $1.70 barrier, making it the most expensive in North America, by a long shot. We haven’t even hit summer yet, when prices traditionally are hiked even more.

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This week, B.C. Premier John Horgan asked the British Columbia Utilities Commission to investigate why costs in his province are so much higher than elsewhere. It hasn’t been the easiest of issues for the anti-pipeline Premier to navigate. The Opposition Liberals have paid for massive billboards around the region blaming Mr. Horgan for the situation, inferring it’s taxes imposed by the NDP that are responsible.

Of course, this is patent nonsense. An increase in the carbon tax on April 1 added one cent to the cost of gas at the pump. In fact, most of the provincial taxes that make up the overall fuel bill were imposed by former Liberal administrations. Nonetheless, Mr. Horgan himself has also tried desperately to find someone to blame in a bid to take the heat off his government.

The reality is, however, the situation is likely to remain as it is for some time. No one can seem to agree on what precisely is accounting for the cost surge in this particular market. That is why an investigation by the utilities commission is welcome; it could help shine a light on the main drivers of the price swell and answer perhaps the biggest question of all: Are oil companies gouging British Columbians out of spite or just because they can?

There would seem to be more than just circumstantial evidence suggesting there may be something to this theory.

A recent report done by the Canadian Centre for Policy Alternatives said that of the 55 cent increase in Metro Vancouver gas prices since 2016, only 6.3 cents of it can be attributed to additional taxes. Meantime, the four companies that supply the region with fuel have hiked their profit margins per litre of gas by 18 cents over that same period.

A separate investigation into the current phenomenon conducted by Vancouver’s Navius Research exposed another interesting fact. Since 2008, the refinery margin in Metro Vancouver increased to 35 per cent from 13. Meantime, in the rest of the country, it was less than 18 per cent. These margins in B.C., the report said, “have decoupled from supply costs, resulting in prices that cannot be attributed to competitive market forces or scarcity of supply.”

It’s also been suggested this discrepancy in margins is about the lack of competition in B.C.; with only a few fuel providers in the region, prices are able to rise at what would be considered unnatural rates. The words “oligopoly” and “collusion” are ones that get thrown around a lot in this discussion.

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There are other factors that are doubtlessly exacerbating the problem. One is the lack of refining capacity in Metro Vancouver. Also, there is only one pipeline supplying the region – Trans Mountain – and it is full. Then there are the aforementioned fuel taxes, which are the highest in the country. B.C. also gets a lot of its gas from the U.S., and the weak loonie only makes those costs greater.

A new pipeline from Alberta, with the extra capacity for fuel it would instantly create, would help alleviate the problem. The irony of that situation isn’t lost on those who have watched B.C.’s premier wage war against the Trans Mountain expansion – a project he’s a lot more muted about these days.

But that won’t be built for a number of years yet, if at all. Meantime, the pain at the pump will likely persist. A probe into whether it is an unavoidable result of present circumstances is a good idea. At the very least, oil companies should have to explain prices that are driving British Columbians to extreme measures.

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